Strategic Energy Research and Capital, LLC
Announces the release of the third in a series of reports on
how the market appears to be pricing Crude Oil
Titled: West Texas Intermediate Crude Oil Fundamental Analysis (Part 3)

West Texas Intermediate Crude Oil Fundamental Analysis

Prepared by J. Michael (Mike) Bodell,
and in conjunction with Strategic Energy Research and Capital LLC.

Mr. Bodell previously spent 25 years at Unocal Corp. providing fundamental research, supporting trading activities and eventually assuming the role as Director of Strategic Planning and Market Analysis. Mr. Bodell retired from Unocal in 2004 and subsequently became a Director at Cambridge Energy Research Associates, Inc. (CERA) based in Houston, Texas. Presently Mr. Bodell is assisting in the development of a new line of energy research from Strategic Energy Research and Capital.

Strong crude fundamentals may weaken slightly with a US Recession but global demand has paid no mind

We maintain our view that strong fundamentals will continue in the 2008 global crude market. We anticipate the average WTI spot price to be $90 per barrel although an upward revision may soon be justified. A US Recession that lowers US oil demand could drop that price average but strong global demand continues to keep supply relatively tight and maintains upward pressure on crude prices. Despite $100 per barrel crude prices, global demand is expected to grow by an astonishing 1.5 percent this year according to the international Energy Agency (IEA).

The report demonstrates that current Crude Oil price formation, very similar to the 2004-2006 trend in which Crude prices acted somewhat counter intuitively, is being driven by:

1) A steady rise in Finding and Development (F&D) costs
2) The loss of productive capacity increasing the slope of the convenience yield
3) Change in comparative inventory

For a copy of the report please contact your Strategic Energy Research and Capital representative.